EU’s Rehn

• We must be firmer in implementing reform.
• Economic recovery in Europe is maintaining momentum.
• Growth is becoming more balanced, self-sustained.
• There is no Euro crisis; it is a crisis of states.
• Have contained crisis to three countries.
• Needed to prevent Greek default to avoid downward spiral.
• Greece has to seriously reinforce budget steps, structural reforms before new steps taken.
• Expects Greek government to announce new steps shortly.

Eurozone manufacturing PMI: 54.8, Services PMI 55.4

The Composite index fell to 55.4 from 57.8 and below the expectations of 57.3.  Overall the PMI data was weaker with Germany also showing lower than expected falls with PMI Manufacturing down to 58.2 from 62 (expected 61) and PMI services coming in at 54.9 from 56.8 (expected 57.0).

German man. PMI 58.2, serv. was 54.9

German data at 3:30

EUR$ completes full hourly retracement

The USD opened the weak firmer from weekend trading; 20 points firmer against the Euro. Since the open the pair has traded continually lower and completed the full retracement from the low of 1.40475 on the 16th to Friday’s high of 1.43446.

Since reaching a low of 1.40204 following a poor French manufacturing number, the pair has rebounded slightly.

ECB’s Nowotny

• Shouldn’t only look at “problematic” countries.
• Germany is particularly encouraging.
• Risks of L or W shaped recovery have decreased.
• Better global outlook could reinforce Europe.
• Countries didn’t manage budgets in good times.
• reasonable, balanced reform package is needed.
• More emphasis on anti-cyclical policies.

ECB’s Weidmann

• Sees need to separate fiscal and monetary policy.
• German economic recovery is “remarkable”.
• German economy in “good shape”.
• Upswing is “broad based”.
• Euro consumer price show ‘significant” jump.
• Need to closely monitor risk of 2ns round effects.
• Need to take gain in long term inflation expectations seriously.
• Inflation expectations show signs of worsening price outlook.
• ECB monetary policy remains “expansionary”.
• Must exit as soon as financial markets recover.

Euro makes new session lows following worse French Man. PMI

France’s May flash man. PMI came in at 55.0 and services PMI 62.8. The EUR/USD traded down to 1.4020 following the release.

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